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​Viking Energy Does It Again: Three Acquisitions in 30 Days

Often times, companies use words like “expeditious” and “aggressive” in describing their business model, but the adjectives are little more than just lip service. Viking Energy Group’s (VKIN) corporate description uses no such language, but maybe it should with the way it is stockpiling undervalued oil and gas assets in Kansas, Missouri, Texas, Louisiana and Mississippi. Twice since September 12, 2017, the New York City-based independent E&P company has announced a string of three acquisitions within a 30-day time frame.

In fact, the only pause between closing one acquisition after another was for news to announce entering a deal for a major acquisition, which was closed shortly after to start the second cascade of lease purchases. In fairness, the company likely isn’t operating under an actual acquisition model of “3 in 30,” but that doesn’t diminish the fact that it has happened twice now in just over four months.

One: Acquisition of Petrodome Energy LLC

At the end of December, Viking closed on a deal that substantially increased the company’s asset portfolio through the acquisition of 100% of Houston-based oil and gas company Petrodome Energy LLC, buying, amongst other things, working interests in multiple oil and gas fields across Texas, Louisiana and Mississippi. The fields are currently producing about 350 net barrels of oil equivalent per day (75% oil).

Viking didn’t just get the oil and gas production, the purchase also gave them 11,620 gross lease acres with conventional oil and gas prospects already defined and other areas ready for expansive drill programs; multiple up dip proven field locations ready to be drilled and completed; and a seasoned management team with deep experience in the region, a certified landman and other staffers.

The acquisition increased Viking’s overall proven oil and gas reserves by about 1.5 million barrels of oil and 993.4 million cubic feet of natural gas. Just considering the oil, that’s reserves with a gross value of $90 million (at $60/barrel oil).

Two: Acquisition of Allen and Woodson Assets in Kansas

On the 16th of January, Viking disclosed the acquisition of a 100% working interest in five new oil and gas leases in Allen and Woodson Counties in Kansas, adding about 1,000 more acres of development land to its portfolio. The deal, completed through Viking’s wholly-owned subsidiary Mid-Con Drilling, included an undivided interest in all oil and gas wells, equipment, fixtures and other property on the leased land used in connection with operations.

S&B Operating, a unit of Kansas Resource Development Co. (KRDC) and an existing operator of Viking in Kansas, will operate the new leases, which are producing oil from the Cherokee formation at a depth of about 850 feet. The wells have potential for increased production, a specialty of KRDC, and the property has several opportunities for future drilling locations.

Three: Acquisition of Ellis and Rooks Assets in Kansas

On January 23, Viking was up to it again, making another large purchase through Mid-Con with the acquisition of a majority working interest in more than 40 oil leases covering approximately 3,300 acres in Ellis and Rooks Counties, Kansas. After assigning part of the acquired working interest to strategic partners in the region, Mid-Con holds working interests in the area of 83.5% to 87.5%.

Cumulatively, over 6.4 million barrels of oil have been produced from the leases. During the first nine months of 2017, oil production averaged 172 barrels of oil per day, or about 46,000 barrels from January through September. At $60/barrel, that’s about $2.8 million gross.

Producing from multiple pay zones, the wells average between 2,700 and 3,300 feet in depth. Formations being targeted are well known for their reserves, including the Arbuckle, Kansas City, Kinderhook and Topeka Limestone.

The acquisition epitomizes Viking’s strategy to acquire producing leases that could be producing more. The latest acquisition is more of the same as the others: the purchase includes assets related to operations; the property is open for multiple in-field drilling locations; and there is tremendous upside through enhancement of existing wells.

Perfect Plan, Perfect Timing

With oil prices continuing to rebound and now near 3.5-year highs, there couldn’t be a better time for Viking to capitalize on increasing flow rates for under-producing or under-appreciated wells in the heartland of American oil. The strategy sounds simple in concept – find wells and squeeze more out of them and install new wells in surrounding area – but executing on it efficiently is harder said that done, although Viking is making it look easy and put together a great run on acquisitions lately.

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